The National Association of Home Builders/Wells Fargo Cost of Housing Index found that in the third quarter of 2024, a family earning the nation’s median income of $97,800 needed 38% of its income to cover the mortgage payment on a median-priced new home. Low-income families, defined as those earning only 50% of median income, would have to spend 75% of their earnings to pay for the same new home.
The figures track identically for the purchase of existing homes in the United States as well. A typical family would have to pay 38% of their income for a median-priced existing home while a low-income family would need to pay 75% of their earnings to make the same mortgage payment.
There was no change in the percentage of a family’s income needed to purchase a new home (38%) between the second and third quarters of 2024, but affordability did improve slightly for low-income families, falling from 77% to 75%. Meanwhile, affordability of existing homes edged higher for both median- and low-income families between the second and third quarter. The CHI indices were 38% and 75% in the third quarter versus 39% and 79%, respectively, in the second quarter.
Top 5 most cost-burdened markets
San Jose-Sunnyvale-Santa Clara, California, was the most severely cost-burdened market on the CHI, where 85% of a typical family’s income is needed to make a mortgage payment on an existing home. This was followed by:
- Urban Honolulu, Hawaii (75%)
- San Diego-Chula Vista-Carlsbad, California (70%)
- San Francisco-Oakland-Berkeley, California (68%)
- Miami-Fort Lauderdale-Pompano Beach, Florida (63%)
Low-income families would have to pay between 127% and 170% of their income in all five of the above markets to cover a mortgage.
Top 5 least cost-burdened markets
By contrast, Decatur, Illinois, was the least cost-burdened markets on the CHI, where typical families needed to spend just 16% of their income to pay for a mortgage on an existing home. Rounding out the least burdened markets are:
- Cumberland, Maryland–West Virginia (18%)
- Springfield, Illinois (18%)
- Elmira, New York (19%)
- Peoria, Illinois (19%)
Low-income families in these markets would have to pay between 33% and 39% of their income to cover the mortgage payment for a median-priced existing home.
NAHB's take on the data
“With the nation facing a shortfall of roughly 1.5 million housing units, the latest CHI data clearly illustrate that a lack of housing is making it difficult for American families to afford to purchase a home,” says NAHB Chief Economist Robert Dietz. “In order to boost the nation’s housing supply, officials at all levels of government must work to eliminate barriers so that builders can build more attainable, affordable housing.”
